Also known as: deposit accounts
Written by attorneys · grounded in primary & secondary sources — see below
An account maintained with a bank in which a security interest may be perfected only by control under Section 9-314.
Dominic Drake granted a security interest in his checking account at First Bank to Dynamic Solutions to secure a loan. Dynamic Solutions filed a financing statement describing the account but never obtained a control agreement or became a customer on the account. When Drake defaulted, Dynamic Solutions discovered its interest remained unperfected because control is required.
Dwight Dorsey granted a security interest in his savings account at Second Bank to Desert Oil. The parties executed a control agreement under which the bank agreed to follow Desert Oil's instructions on disposition of funds without Dorsey's further consent. Desert Oil thereby perfected its security interest in the deposit account.
Select any source to read its text and confirm it supports the definition.
Danielle Dixon granted a security interest in her operating account at Third Bank to Decker Electronics under a control agreement. After Decker Electronics instructed the bank to cease honoring its directions, the bank refused further instructions from Decker Electronics. Decker Electronics thereby lost control and its perfected status ended.
A security interest in a deposit account is perfected only by control under Section 9-314. Filing a financing statement does not perfect the interest.
Supporting sources
Control exists if the secured party is the bank maintaining the account, if the debtor, secured party, and bank agree in an authenticated record that the bank will follow the secured party's instructions, or if the secured party becomes the bank's customer on the account.
Supporting sources
No. A secured party has control even if the debtor retains the right to direct disposition of funds from the deposit account.
Supporting sources
A security interest perfected by control remains perfected only while the secured party retains control.
Supporting sources